Garment companies record lowest exports drop this year

Garment companies record lowest exports drop this year

Workers make garments at a Phnom Penh factory. Cambodia’s garment exports have fallen more than 21 percent so far this year, but September was the best month yet in 2009.

Ministry of Commerce figures show 15.15pc drop in September

Cambodia's garment exports are losing market share in the US.

Q3 garment exports
Annualised figures year on year:

September - down 15.15pc

August - down 18.31pc

July - down 18.67pc

Year to date - down 21.66pc

Source: Ministry of Commerce

GARMENT exports declined at their slowest pace this year in September, down 15.15 percent year on year to US$189.7 million, figures released by the Ministry of Commerce late Tuesday showed.

The decline is the smallest year-on-year monthly drop since last December, when exports fell 13.64 percent to $222.1 million, and comes as competitor Bangladesh said September was its worst month for garment exports in six years.

Cambodia’s garment exports have fallen on a year-on-year basis every month since last November, when they fell 0.89 percent to $218.3 million, dragged down by falling consumer spending in the key US market, which accounts for around 70 percent of total garment exports. Exports also fell in July and September last year, before the shockwaves of the US financial meltdown began to be felt around the world, but gained in every other month in 2008.

Garment exports have now fallen 21.66 percent over the first nine months of the year to $1.78 billion.

Garment Manufacturers Association of Cambodia Secretary General Ken Loo said there was not enough data to predict whether the impact of the global economic recession on the sector was beginning to bottom out, and that the next three months will be critical.

“If the Christmas period this year is good, then maybe we can say we have a bit more confidence of a recovery,” he said. “But, if Christmas is very weak, I don’t think we will see a recovery.”

Bangladesh’s Export Promotion Bureau (EPB) announced this week that its total exports – of which garments represent around 80 percent – fell around 28 percent from a year earlier in September, the steepest year-on-year drop in six years, as the delayed impact of the global recession routed the country’s garment sector.

However, garment shipments, which account for 80 percent of Bangladesh’s annual exports, fell just 10 percent over the July to September quarter despite the bad month. Its garment exports grew 15.5 percent to $12.3 billion in the year to June 30, helped by low prices that undercut rivals such as China, India Vietnam, and Cambodia.

The World Bank said this month that Cambodia’s market share in the key US garment market had fallen from 3.2 percent last year to 2.8 percent in mid-2009, reflecting a possible structural weakness in the country’s competitiveness. All countries in the region had been hit hard as US demand for garments plummeted in the midst of the economic and financial crisis, but as demand began to recover, Cambodia was not sharing in the gains, Ivailo Izvorski, a World Bank economist, said at the time.

“We see a very negative development where Cambodia’s garment exports are losing market share in the US, suggesting that perhaps there are deeper structural problems with competitiveness,” he said. “Whether that will be reversed is very hard to say, but the fact they lost position is something that they have to think about … given how large the garment sector looms for the economy.”

Ok Boung, a secretary of state at the Ministry of Commerce, said the downturn was not a big issue, as the sector had grown sixfold since 2005.
“Compared to five years ago, our garment sector is still good even though exports have dropped in many months this year,” he said.

The Ministry of Labour said last month that 77 garment factories were shuttered in the first nine months of the year, costing 30,683 jobs. A further 53 suspended operations at some point over the period, it said.

ADDITIONAL REPORTING BY AFP

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